The Indian hotel industry witnessed a significant surge in investment during the first half of 2024, according to a report by JLL. Hotel investments reached USD 93 million between January and June, and projections indicate a potential total investment of USD 413 million by year-end. This represents a remarkable 22% growth compared to 2023.
The JLL report, titled “Hotel Investment Trends – India H1 2024,” highlights the key trends driving this investment surge. A significant portion of the investment, approximately 72%, was directed towards operational hotels. This demonstrates investor confidence in the existing hotel market and its potential for growth. Another 23% of investment focused on properties under construction, indicating a strong pipeline of new hotel development projects. The remaining investments were directed towards land leases, suggesting a bullish outlook on future hotel development.
During the first half of 2024, six hotel transactions were finalized. These transactions encompassed a diverse range of assets, including operational properties in major cities and leisure markets, as well as land leases for new developments near airport zones. These transactions are a testament to the increasing interest of investors in the Indian hotel market.
JLL anticipates that the positive momentum witnessed in the first half of 2024 will continue throughout the year. The latter half of 2024 has already seen a promising start, with JLL facilitating two transactions in prime hospitality markets, totaling USD 70 million. These transactions further solidify the growth trajectory of the Indian hotel investment market.
The report indicates that Tier I cities continue to dominate the hotel investment landscape, accounting for 78% of the anticipated transaction volumes. Tier II and III cities contribute the remaining 22%, indicating an expanding investment footprint across the country.
Listed hotel companies played a prominent role in transactions during the first half of 2024. The upscale segment captured the largest share of the transaction volume at 44%, followed by the mid-scale segment at 31%, luxury at 23%, and the economy segment at 3%. This suggests a diverse range of investor preferences, catering to different market segments.
A total of 19,440 hotel keys were signed throughout the first half of 2024, with a significant 83% of these located in Tier II and III cities. This indicates a strong focus on expanding hotel offerings in secondary markets, catering to the growing domestic travel demand.
The majority of these agreements were management contracts, accounting for 89% of the total. This trend indicates a preference for experienced hotel operators to manage properties, ensuring optimal performance and guest satisfaction. Franchise agreements accounted for 8% of the agreements, while lease and revenue share agreements contributed 3%.
The number of greenfield projects initiated in the first half of 2024 surpassed the total for the entire year of 2023, reaching approximately 13,700 keys compared to 13,600 keys in 2023. This surge in greenfield projects underscores the strong confidence hotel developers have in the sector’s long-term prospects.
Key Tier I markets, including Mumbai, Hyderabad, Pune, and Chennai, saw new hotel signings featuring over 250 keys each. This growth is fueled by robust domestic demand and vigorous commercial activity, indicating a bright future for these key markets.
Additionally, the first half of 2024 saw the opening of 6,071 new hotel keys. The midscale segment claimed the largest share of these new openings at 46%, followed by upscale at 29%, upper upscale at 12%, luxury at 8%, and economy at 5%. This further demonstrates the diverse range of hotel offerings being introduced to cater to a wide spectrum of travelers.
Overall, the JLL report highlights the robust growth of the Indian hotel investment market in the first half of 2024. This positive trend, driven by robust domestic demand, strong commercial activity, and a positive outlook for the sector’s long-term prospects, is expected to continue throughout the year.
